Cryptoupdated 1h ago3 min read
Hyperliquid Policy Center Urges SEC To Revise Crypto Rules On Airdrops And Token Trading
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Hyperliquid Policy Center urged five changes to SEC Regulation Crypto Assets. Recommendations include codifying airdrop analyses and clarifying secondary trading.
SEC rulemaking faces push
The Hyperliquid Policy Center filed a comment letter with the U.S. Securities and Exchange Commission on Monday supporting proposed Regulation Crypto Assets and asking for five revisions before the commission votes.
The policy center backed a proposal that would let qualifying crypto projects raise up to $5 million over as long as four years under a startup exemption, or up to $75 million in any 12-month period under a separate fundraising exemption.
The policy center urged the SEC to write its March interpretation into the rule text so that a free token distribution is not an investment of money when recipients give no tangible, definable consideration.
The policy center also asked the SEC to separate automated repurchases that run on fixed, published rules from discretionary ones steered by a central party, and it said the buyback request touches Hyperliquid's own token.
The policy center said the SEC staff already address buybacks in a crypto FAQ amended on September 28, and it asked the staff position in the final rule while seeking clarity on what happens when someone can change a buyback's parameters.
Airdrops, trading, and safe harbor
Bitwise Asset Management urged the SEC to clarify how investment managers should determine whether a given crypto asset is subject to securities laws, arguing that managers need a standard they can apply based on "publicly available information." Bitwise also sought clarification on when an issuer may rely on the Form TR filing, which is intended to demonstrate that an investment contract no longer exists, and how to evaluate tokens in the absence of such a filing. The Hyperliquid Policy Center urged the SEC to broaden its proposed safe harbor, arguing that it could come too late in a project’s development and warning that the proposal "fails to provide clarity" on whether unregistered intermediaries can facilitate token trading.
The policy center asked the SEC to address secondary-market transactions directly rather than leaving exchanges and decentralized trading venues facing regulatory uncertainty, and it urged the SEC to distinguish administrative steps like connecting a wallet or completing sanctions checks from payment. Former SEC enforcement official John Reed Stark and Duke University finance scholar Lee Reiners urged the commission to withdraw the proposal entirely, arguing it exceeds the agency’s statutory authority and would weaken investor protections.
Deadlines and competing legal views
The SEC’s public comment period was set to close Tuesday, and the SEC would review the submissions before deciding whether to revise, adopt or withdraw the proposed rules. Blockhead said SEC Chair Paul Atkins had stated legislation is still needed to make the rules durable, and the policy center’s letter was described as a set of requests, not rules. Hyperliquid’s policy arm argued that the SEC should make federal preemption of certain state registration requirements permanent, so that projects that qualify for the safe harbor are not exposed to state rules afterward.
The Hyperliquid Policy Center also warned that the proposal’s safe harbor certification could leave projects with little reason to build in the US, and it argued that the current draft would not deliver the certainty the SEC intended. Stark and Reiners warned that adopting the rules in substantially their current form would invite an immediate legal challenge, potentially resulting in the framework being struck down.